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Foreign Exchange: The Complete Deal by James Sharpe

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3. The Basics of Foreign Exchange

A definition of foreign exchange

All claims on foreign currency payable abroad, whether consisting of funds in foreign currency held with banks abroad, or bills or cheques, again in foreign currency and payable abroad, are foreign exchange (also called Forex or FX). In the trading of foreign exchange between banks only foreign currency held with banks abroad is concerned. For the purposes of this book foreign exchange only applies to bank balances denominated in foreign currency.

Foreign bank notes are not foreign exchange in this sense. They can be converted into foreign exchange provided they can be placed without restriction to the credit of an ordinary commercial account abroad. A currency, whether ...

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